Major overhaul of charity accounting rules on the near horizon

Thomson Reuters Tax & Accounting News reports Proposed Changes for Not-for-Profit Reporting May Come in March. An exposure draft from FASB could be out in March.

This would be the biggest overhaul of NPO rules since statements 116 and 117 were released back in 1993. Has it been 20 years already? Wow.

Article point to several major areas of change:

  • Shrinking the number of net asset classes from three to two, by combining temporarily restricted and permanently restricted into restricted.
  • Increased explanation of what cash is available for what purposes, i.e. donations for scholarship fund aren’t the same as donations for capital improvement or operations. Goal is to improve liquidity information.
  • Specific definition of an operating measure instead of allowing charities to define operations as they wish given their circumstances.
  • Requiring direct method of cash flow.

Keep your eyes open. Looks like this will be a big change, even if not quite a drastic as 116/117.

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